The Malta Independent 16 December 2019, Monday

Maltese MEPs reject proposal to end member states' veto over EU tax legislation

Jeremy Micallef Friday, 18 January 2019, 09:36 Last update: about 12 months ago

MEPs David Casa, Roberta Metsola, Francis Zammit Dimech, Marlene Mizzi, Alfred Sant, and Miriam Dalli have all rejected the notion that member state’s veto power be removed in relation to issues of taxation.

The European Commission (EC) recently launched a debate, and suggested that decisions on taxation should no longer be decided unanimously by European Union (EU) member states. This comes with a report from an EC think tank publishing a report that veto power should be removed, not only in cases of taxation, but also when voting on social and environmental issues.

The train of thought from the EC is that this will lead to more efficient timeframes when pushing legislation that affects the bloc and its 28 member states.

Answering questions from this newsroom, the three Nationalist MEPs jointly insisted that “prior to Malta’s accession to the EU, a PN-led Government had ensured that issues related to taxation remain of national competence”.

“Partit Nazzjonalista’s delegation in the European Parliament has, from day one, successfully defended this position.”

Other EU member states that rely on their taxation system as a key part of their economy have frequently voiced their displeasure at attempts from the EU to centralise power and relinquish nations of their sovereignty.

In fact, the MEPs also noted that the EU is not a homogenous area and not all regions in the EU face the same economic realities, be it for their domestic market size, geographical realities or resources.

“Through tax harmonisation, a disproportionate burden will be placed on the financial systems of smaller EU states like Malta.

The focus should remain on stamping out any abuse of the system and we will keep pushing back against any attempts to label Malta as a tax haven.”

Whilst insisting that competence of taxation is a red line, they jointly noted that “veto on taxation seems to be one of the main pillars of the electoral campaign of Joseph Muscat’s S&D Group”.

The Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said that the rules of unanimous agreement in taxation are very problematic, arguing that this only made sense in the 50s when there were only six member states.

The EC said that because of the rule of unanimity there are proposals, including those for fiscal justice, which have been blocked for many years.

Speaking to this newsroom, Labour MEP Marlene Mizzi also noted that fiscal policies and tax harmonization are not possible due to the EU not being a homogenous area, going on to insist that there needs to be flexibility in tax policy as a one-size-fits-all approach could put certain regions and countries at a disadvantage.

“Small Member States, especially those at the periphery of the EU, need to have control on their taxation policy, so as to maintain a competitive edge in the single market, and offset the disadvantages emerging from the size differences and country specificities.

It is important also to stress that the veto is rarely used and when used it always for very particular national interests.”

Labour MEP Alfred Sant remarked that its presentation is the result of the growing pressure at EU level to combat tax evasion, avoidance and aggressive tax planning following the Luxleaks, Panama, Swiss etc. scandals.

“But it is also the result of longer-term efforts conducted by some of the larger member states, chief of which France, to limit what they call tax “competition” among member states.”

How he explains it, the countries with higher tax burdens would like to get other countries which they claim are keeping their tax levels artificially low to come closer to their levels.

“Certainly at this tage of the EU’s development and given prevailing circumstances, I am not in favour of any dilution of EU member states competences and certainly not in the field of taxation policy.”

Sant says that his point of view on this issue has made him less than popular with his colleagues in the Economic and Financial Committee of the European Parliament (EP) due to what he describes as a “significant majority of the EP”, favour the arrangements similar to the ones that the commission has outlined.

Labour MEP Miriam Dalli echoed her colleagues’ thoughts in that not all member states have the same economic realities, and small economies do face different geographical realities, market size and resources that are different from larger economies.

“When dealing with taxation and fiscal matter, unanimity is important because it allows us to protect our country’s specificities.”

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